Britain Must Brace Itself As A No-deal Brexit Becomes More And More Likely

The Economist (Feb 2019) had noted: “One reason Brexit has proved tricky is that the party divide does not map onto views about Europe.” This was made crystal clear on March 12 when the House of Commons, 17 days before Brexit, overwhelmingly rejected British Prime Minister Theresa May’s Brexit deal by 391 votes to 242. A dramatic last-minute visit by May on March 11, to Strasbourg to meet Jean-Claude Juncker, President of the European Commission and to clarify “legally binding” changes to the “backstop” failed to convince an unyielding Commons.

Just before the vote, Britain’s Attorney-General Geoffrey Cox had reiterated that despite these legally binding changes, the legal risk of the UK being locked in an indefinite backstop with the EU remained “unchanged.” MPs across the political spectrum had already made plain their opposition to the deal. This included the influential European Research Group of MPs and the Democratic Unionist Party (DUP). On the eve of this crucial vote, May had failed to secure significant new concessions from an unsympathetic EU. The die was cast. The outcome was clear.

The domestic fallout was immediate and an ominous indicator of the May’s greatly weakened political position. Scotland’s First Minister, Nicola Sturgeon, seethed: “Tonight’s outcome was entirely predictable, and if they had been prepared to listen at any stage and engage constructively instead of simply pandering to Brexit extremists, they could have avoided it. Instead, we now have a Government that has effectively ceased to function and a country that remains poised on a cliff edge.”

Jacob Rees-Mogg, chairman of the European Research Group of Brexiteer MPs said: “the problem with the deal was that it did not deliver on the commitment to leave the EU cleanly and that the backstop would have kept us in the customs union and de facto in the single market.”

Seeking to make political capital from the crisis, Labour leader Jeremy Corbyn announced that May should now call a general election. He said: “The Government has been defeated again by an enormous majority and it must accept its deal is clearly dead and does not have the support of this House.” He added that a no-deal Brexit had to be “taken off the table” – and Labour would continue to push its alternative Brexit proposals. No mention was made of Labour’s commitment to back another referendum.

The reaction from the EU was immediate and unhelpful. European Council President Donald Tusk noted: “If there is a solution to the current impasse it can only be found in London.” He added that even if the UK voted to rule out a no deal and requested an extension to Article 50, a delay was not automatic as it would need approval by the remaining 27 EU members. “The EU 27 will expect a credible justification for a possible extension and its duration.” Michel Barnier, the EU’s chief negotiator on Brexit said: “The impasse can only be solved in the UK. Our no-deal preparations are now more important than ever.”

It is clear that the other 27 EU members will not allow the British to ‘cherry pick’ or choose from the agreement they painstakingly reached with Mrs. May. The EU spokesman in Brussels said: “With only 17 days left to March 29, today’s vote has significantly increased the likelihood of a no-deal Brexit.” He added that the EU would consider an extension to Brexit if the UK asked for one but the 27 other EU member states would expect “a credible justification” for it.

What happens now? May said MPs would have to decide whether they want to delay Brexit, hold another referendum, or whether they “want to leave with a deal but not this deal.” She said that the choices facing the UK were “unenviable.” Significantly, May also told MPs the Government would announce shortly details of how the UK will manage its border with Ireland in the event of a no-deal Brexit.

If MPs opt to rule out a no-deal Brexit on March 14, a third vote will take place on March 15 at which they would probably vote in favour of a delay of up to three months till end June to Britain’s exit. If they vote against a no-deal Brexit, they will vote the following day on whether Article 50 of the Lisbon Treaty which is the legal mechanism for taking the UK out of the EU on March 29 should be extended.

The scenario is complex and could get more complicated. Under pressure from ultra-conservatives in her party, May reluctantly agreed to a free vote on the motion of leaving the EU with or without a deal, allowing Conservative Party members to follow their conscience rather than the Government position. The danger is that many Conservative MPs already favour a no deal. This group is likely to have increased in number. They fear that unless they vote for a no deal, Brexit itself could be delayed indefinitely. The Commons remains deeply polarised and a split in the Conservative Party cannot be ruled out.

Britain today appears to be heading for a no-deal Brexit because that is the default position unless a deal or a delay can be agreed to by both sides. By now it is clear that despite May’s protests, her Brexit tactics as pointed out by the Economist (February 2019) to “run down the clock” has taken her nowhere. If May waits till late March ’19 for a final vote in the Commons, it would be impossible for EU leaders at the Summit level to consider last-minute concessions. The EU Summit is being held on March 21-22

In June 2016, a month before the Brexit referendum, the UK Treasury had forecast: “A vote to leave would represent an immediate and profound shock to our economy.” As the Brexit deadline approaches, there are ominous signs that Britain’s decision to quit the world’s largest trading block is beginning to take its toll. Official data published on February 11 showed that in December ’18 GDP had shrunk by 0.4 percent. The fourth quarter of 2018 showed GDP growth of only 0.2 percent. The Bank of England has now revised the probability of the economy shrinking and going into recession from 13 percent to 22 percent. The ‘Brexit effect’ is particularly clear in industries that trade or are dependent on EU workers such as the engineering and vehicles sector as well as the hotel and restaurant industry. This downslide would impact both the UK and the EU adversely at a time when the eurozone is weak and just coming out of recession.

For businesses, lawmakers and government officials who fear a no deal cliff-edge will damage the UK economy and cause panicked stockpiling of foods and medicines and long queues at the border, the prospect of Parliament actively voting for a no deal scenario is very worrying indeed.

It has been appropriately said that under enough heat, atoms start to fly apart. This would appear to be the present state of Britain’s politics where May and Corbyn appear to have lost control of their Brexit policies and their parties. Britain appears to be heading inexorably towards the cliff edge. Approval for deferment till end June only extends the suspense. It offers no solution.

(The author was the longest serving director general in the MEA handling Europe, ambassador to The Netherlands and permanent representative to the OPCW. Views are personal)